Chicago-based licensing and distribution digital music firm Music Dealers is heading into liquidation.
Founded in 2008, Music Dealers was created to license and distribute digital music, largely from unsigned artists, to the advertising, TV, film and gaming industries.
In a letter sent to its its clients/creditors and obtained by MBW, the company said it’s closing operations as a result of “significant startup costs and several years of operating losses.”
Music Dealers has also experienced significant cash flow issues requiring it to incur additional debt, on a secured basis, in order to be able to continue operations.
The company raised $9.25 million in funding between 2010 and 2013. It has closed with a deficit net worth of $9.93m, and Hypebot is reporting that artists have been left without payment.
“Despite management’s best efforts to restructure operations to profitable levels, the company’s largest client abruptly terminated their contract with Music Dealers resulting in a significant impact on liquidity, future revenues and the resignation of several key employees.”
The letter continues: “Despite management’s best efforts to restructure operations to profitable levels, the company’s largest client abruptly terminated their contract with Music Dealers resulting in a significant impact on liquidity, future revenues and the resignation of several key employees.
“As result of the foregoing, Music Dealers’ ability to generate sufficient cash flow to meet its obligations as they became due was severely compromised.
“Music Dealers and its management concluded that it could no longer continue as a going concern.”
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